WASHINGTON—With much speculation around the future of overdraft services and all its related income as the CFPB puts the product in its sights, CUNA is calling on the agency to move cautiously and recognize that many members have indicated they strongly support overdraft programs.
CUNA also expressed concern over the potential costs to credit unions from the recent Order the CFPB presented to Fiserv.
In a letter to CFPB, CUNA CEO Jim Nussle said, “Credit unions offer overdraft programs as a convenience and accommodation to their members and members have indicated they appreciate and value these services. As the Bureau considers what next steps it might take regarding overdraft programs, I urge you to take into consideration the importance of overdraft programs to consumers who do not want to be embarrassed at the point of sale and want the confidence of knowing a purchase or transaction, such as a mortgage payment, will be honored.”
Nussle called on the Bureau to recognize that there are costs to the services that credit unions offer, including services such as overdraft protection. “It is reasonable for credit unions to assess appropriate fees for such services, particularly in light of the fact that at a credit union, costs incurred by the institution are borne by its members,” Nussle said.
As the CFPB continues to look at overdraft programs, Nussle called on the agency to “conduct its research of overdraft in a way that does not burden credit unions, who continue to struggle with a “myriad of elevated compliance and regulatory costs.”
“We are deeply concerned that the November 2014 Order issued to major credit union service providers has caused these organizations to incur costs that, for in the case of Fiserv, will be passed on to credit unions and ultimately their members,” said Nussle. “In a letter to its clients, Fiserv states, ‘While the CFPB may be seeking efficiency and data uniformity by issuing this Order to large processors like Fiserv rather than thousands of individual financial institutions, this approach creates significant expense for us. The CFPB asserts it is within their statutory power to impose these costs on the industry they regulate rather than fund them from their own budget, and to that end we are tracking our costs carefully with the potential that these will be passed through to our hosted (ASP) account processing clients.”
Nussle said he is concerned that the CFPB Order to Fiserv has the potential to impose yet another unplanned cost burden on credit unions.
“I urge the CFPB to take any corrective actions necessary to assure credit unions are not unfairly impacted by the Bureau’s recent Order concerning overdraft,” said Nussle. “Every dollar a credit union spends on issues related to unnecessary regulation is a dollar that is not used for the benefit of its members.”